tailieunhanh - Lecture Auditing and assurance services (6/e) - Chapter 12: Reports on audited financial statements

After studying this chapter you will be able to: Understand the types of reports that accompany an entity's financial statements and the content of the auditors' standard (unmodified) report, identify situations in which language in the standard (unmodified) report is modified and the type of opinion issued in those situations, identify situations in which auditors add explanatory language to an unmodified opinion. | Auditing & Assurance Services, 6e Chapter 12 Reports on Audited Financial Statements In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Enron Corp. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations, cash flows, and changes in shareholders’ equity for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Opinion paragraph from Arthur Andersen’s final audit of Enron Corp. (dated February 23, 2001) Components of the Standard (Unmodified) Report Introductory paragraph F/S and years examined Management’s Responsibility section Management responsible for financial statements Management responsible for internal control Auditor’s Responsibility section Auditor responsible for issuing opinion on financial statements Audit conducted in accordance with GAAS Audit provides reasonable assurance Opinion Are F/S presented in accordance with applicable financial reporting framework (GAAP)? The Standard (Unmodified) Report (Other Elements) Title includes the word “independent” Addressed to the client (normally, shareholders and board) Dated when auditors have obtained sufficient appropriate evidence (date of the auditors’ report) Signed by the accounting firm Types of Opinions Unmodified opinion F/S are in accordance with GAAP Standard report may be modified to disclose additional matters Qualified opinion “Except for” some matter, F/S are in accordance with GAAP Adverse opinion F/S are not in accordance with GAAP Disclaimer of opinion No opinion is issued by auditors Departures from GAAP Standard Report (Unmodified Opinion) Qualified Opinion Adverse Opinion NO NO YES YES Is the Departure Material? Is the Departure Pervasive? Qualified Opinion Issued when departure is material, yet not pervasive Report Modifications: Add paragraph preceding the opinion paragraph . | Auditing & Assurance Services, 6e Chapter 12 Reports on Audited Financial Statements In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Enron Corp. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations, cash flows, and changes in shareholders’ equity for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Opinion paragraph from Arthur Andersen’s final audit of Enron Corp. (dated February 23, 2001) Components of the Standard (Unmodified) Report Introductory paragraph F/S and years examined Management’s Responsibility section Management responsible for financial statements Management responsible for internal control Auditor’s Responsibility section Auditor responsible for issuing opinion on financial statements Audit conducted in accordance with GAAS Audit provides reasonable .